Citigroup shuffles management, Pandit remains
Citigroup (C) announced today that is was changing several top management roles in the company, which CEO Vikram Pandit described as moves that will "further help in positioning our company for the future."
CFO Ned Kelly will step down and transition to a role with "broader responsibilities for strategy and M&A," which likely means he will be responsible for selling parts of the company to simplify operations. Kelly became the CFO in March 2009, and will be replaced by John Gerspach, Citi's controller and Chief Accounting Officer. Gary Crittenden, who was Citi's CFO for two years before becoming Chairman of subsidiary Citi Holdings, will leave the company to spend more time with family. Notably absent from the list was Pandit, who has been the target of much criticism for his management of Citigroup.
The changes come one week before Citigroup is scheduled to report their second quarter earnings results. Analysts on average expect Citi to lose $0.26 per share, compared to $0.54 cents in the same quarter last year. All estimates anticipate a loss, a sign of how Citi has struggled to attract believers that it can turn its operations around.
In a June 16 note obtained by DailyFinance, Morgan Stanley (MS) reported that in their meeting with then-CFO Ned Kelly, he emphasized the firm's objective is to quickly wind down Citi Holdings. That segment of Citi had more than $800 billion in assets, and includes brokerage, asset management, and consumer finance businesses. Morgan Stanley had an "Equal-weight" rating and $6 price target on Citigroup stock, part of the large bank industry rated as "Attractive." Citigroup shares currently trade under $3.
Citigroup has received the largest amount of government assistance of any bank; through the TARP program, the Treasury Department has invested $45 billion in return for preferred stock, and received another $27 billion in preferred stock in exchange for guaranteeing losses on more than $300 billion in assets. The U.S. government later converted its preferred stock into common shares, becoming the largest shareholder in Citigroup, and making the bank one of the best-capitalized in the world according to regulatory ratios.
James Cullen also edits and writes at CollegeAnalysts.com.